Efficiency & perfect competition

Now we bring costs, revenue and profit together to judge how well a market serves society. We define the two kinds of efficiency the examiner keeps separate — productive (minimum average cost) and allocative (price equal to marginal cost) — and sharpen the difference between normal and abnormal profit. Then we build the perfectly competitive firm on the board: horizontal AR = MR = D at the market price with U-shaped AC and MC, the short-run abnormal-profit case, and the long-run normal-profit result where free entry leaves the firm both productively and allocatively efficient.